CAPE TOWN – The next president of South Africa will face some major challenges when he takes over from erstwhile President Jacob Zuma.
ANC president and national Deputy President Cyril Ramaphosa will have to tackle major issues from rebuilding investor confidence to reviving the economy in the wake of Jacob Zuma’s tremulous tenure.
Zuma resigned on Wednesday night at about 11pm. His time in office has been marred by corruption allegations, political scandals, and policy blunders.
As the nation reels from last night’s developments Business Report takes a look at some of the major issues Ramaphosa will face when he is elected as the new president of South Africa.
TAKING ON CORRUPTION
The auditor-general and South Africa’s graft ombudsman have found that billions of rands are stolen or wasted each year. Corruption is an endemic issue within the state. Zuma’s law-enforcement appointees have been slow to act and have in some cases protected those involved in corruption allegations. The fact that a number of Zuma’s allies have been implicated in these allegations has also slowed the process of tackling corruption.
Ramaphosa will have to replace several key officials in order to tackle the corruption scourge. Moreover, the new president will have to re-assert confidence, ensure independence, and build integrity within the criminal prosecution system.
Ramaphosa needs to show South Africans and the international community that he is intent on ensuring all those found guilty of corruption are held accountable.
SOEs IN CHAOS
The looting spree that seemed to be systematic with the Zuma era targeted state-owned entities (SOEs) such as Eskom. The state utility is currently at risk of running out of cash and is under review.
One of Ramaphosa ‘s first steps was the appointment of a new board at Eskom but he has yet to appoint a permanent chief executive. He also has to assist in appointing a number of top management positions. The new commander in chief has to then raise a large amount of funding for Eskom.
While Eskom may be the most urgent SOE in crisis, SAA, PetroSA and a number of other entities will need his attention. What seems to be the most urgent issue is new leadership.
The National Development states that an average 5.4% economic growth rate is required to address the 27% unemployment rate. But the central bank expects an expansion of just 1.4% in 2018 and a mere 1.6% in 2019. It is therefore clear that greater policy decisions would go a long way towards boosting business confidence and international investment in South Africa. This is especially needed in the mining industry. This sector accounts for half of South Africa’s exports.
STOP THE DOWNGRADES
Fitch Ratings and S&P Global Ratings cut South Africa’s debt to junk in 2017. This was after Zuma fired Nhlanhla Nene and then Pravin Gordhan as the country's finance ministers. Moody’s Investors Service put the nation on review for a downgrade in November and is due to deliver its assessment in March, according to Bloomberg.
Ramaphosa will undoubtedly be required to create a new team that will actively tackle corruption, build growth and reduce the budget deficit.
THE FREE EDUCATION SAGA
The free tertiary education initiative that Zuma announced before his resignation will be one of the major thorns in Ramaphosa’s path. The reality is that there is no budget for this plan even though the ruling party endorsed the plan. It will be very interesting to see how Ramaphosa will address this issue and secure the funds to help tertiary students.
In November 2017 Ramaphosa outlined an economic plan aimed at generating jobs and economic growth and tackling inequality. The plan set a growth target of 3% for 2018, rising to 5% by 2023.
According to writer Jakkie Cilliers, South Africa's growth forecasts are at 1.1% for 2018.
Nothing is more important for South Africa – and Ramaphosa as the country’s incoming president – than growth and translating that growth into employment creation, says Cilliers. That, in turn, requires foreign and domestic investment, which is only possible with policy certainty and rapid movement to a new leadership. It also requires a positive partnership with the private sector.
-BUSINESS REPORT ONLINE, BLOOMBERG